The Abrams, Bartle, and Creighton partnership began the process of liquidation with the following balance sheet: $$\begin{array} { l l l r r }
\text { Cash } & \$ 16,000 & & \text { Liabilities } & \$ 150,000 \
\text { Noncash assets } & 434,000 & & \text { Abrams, capital } & 80,000 \
& & & \text { Bartle, capital } & 90,000 \
& & & \text { Creighton, capital } & 130,000 \
\text { Total } & \underline { \$ 450,000 } & & \text { Total } & \$ 450,000 \
\hline \hline
\end{array}$$
Abrams, Bartle, and Creighton share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $12,000.
The noncash assets were sold for $134,000. Which partner(s) would have had to contribute assets to the partnership to cover a deficit in his or her capital account?

Question

The Abrams, Bartle, and Creighton partnership began the process of liquidation with the following balance sheet: $$\begin{array} { l l l r r } 
\text { Cash } & \$ 16,000 & & \text { Liabilities } & \$ 150,000 \
\text { Noncash assets } & 434,000 & & \text { Abrams, capital } & 80,000 \
& & & \text { Bartle, capital } & 90,000 \
& & & \text { Creighton, capital } & 130,000 \
\text { Total } & \underline { \$ 450,000 } & & \text { Total } & \$ 450,000 \
\hline \hline
\end{array}$$
Abrams, Bartle, and Creighton share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $12,000.
The noncash assets were sold for $134,000. Which partner(s) would have had to contribute assets to the partnership to cover a deficit in his or her capital account?

Quizplus · Accepted Answer

Explanation:The partnership had a deficit of $12,000 ($150,000 - $134,000 - $12,000). Abrams and Creighton would have had to contribute assets to the partnership to cover the deficit in their capital accounts. Abrams would have had to contribute $4,800 (3/10 * $12,000), and Creighton would have had to contribute $7,200 (5/10 * $12,000).

The Abrams, Bartle, and Creighton Partnership Began the Process of Liquidation